Cash Paymaster Services accused of interfering with SAPO card swap

The Black Sash has alerted the Panel of Experts appointed by the Constitutional Court to oversee the transition of social grant payments to South Africa Post Office that Cash Paymaster Services has, in some areas, attempted to lure beneficiaries into swopping their current Sassa cards for Net1's Easy Pay Everywhere (EPE) green cards instead. And while the CPS contract has been reduced to cash only, NET1, says the Sash, continues to make “a large profit”.

Considering the many spokes former minister Bathabile Dlamini shoved into the wheels of the great Sassa social grant card switcheroo, it is no surprise to learn that there is much scurrying behind the scenes before Net1/CPS's sell-by date in September 2018.

One of the most serious charges highlighted by the Black Sash is that in some areas, CPS officials sidelined and even threatened Sapo officials who were attempting to facilitate beneficiary card swops.

According to the Sash, CPS had instead offered these beneficiaries Net1's Easy Pay Everywhere “green cards”. The EPE card enables beneficiaries to access Moneyline loans. Moneyline Financial Services is a Net1 subsidiary.

The Black Sash said that during a meeting at the Ethekwini Community Participation and Action Support Unit in May 2018, the lobby group had been informed that beneficiaries attempting to swop their current SASSA/Grindrod cards for the new Sassa/Sapo card, had been waylaid by CPS officials. Around 50 beneficiaries had been subjected to these tactics.

“The Black Sash KZN regional office was requested by the Government Communication and Information System (GCIS) to facilitate a workshop in Welbedacht on Thursday, 31 May. The GCIS regional communication co-ordinator, VasanthiNaidoo, who is based in Claremont and was present on the day, verified that CPS officials prevented Sapo from addressing or dealing with beneficiaries. GCIS was even threatened by CPS officials to not interact with beneficiaries or share information with them,” said the Sash.

CPS officials “were aggressive and intimidating to Sapo and to beneficiaries and forced people to take the EPE Card.”

The Sash maintained that Net1's EPE card is “deeply problematic” and that investigations had revealed that beneficiaries had been tricked into signing up for these cards.

CPS and Net1, said the SASH, continued to use their position as the information technology partner to Grindrod Bank, to migrate those with the Sassa Grindrod bank accounts to the private EPE bank account without the appropriate authorisation to Sassa or under the pretext that it is the new Sassa card.

“This bypassing of the social grant system and procedures must end. We request the Panel of Experts to investigate this and direct Sassa, with the help of the South African Reserve Bank and Pasa, to exercise oversight over Grindrod Bank (CPS/Net1) to remedy this practice immediately.”

Concern was also noted that Grindrod Bank, CPS and Net1 would retain possession of confidential information that had been captured during the six-year enrollment process.

“Sassa, the Information Regulator and the Banking Association of South Africa (Basa) must do everything to ensure that the confidential data is returned to Sassa for proper disposal in terms of the POPI Act. We request the Panel of Experts to raise these concerns with the Constitutional Court.”

Over and above this many questions remain with regard to the dispensing of cash payments which, said the Sash, is a crisis that is deepening. There is also little clarity with regard to how much CPS is being paid per beneficiary.

Prior to April 2018, CPS had been paid a fee of R16.44 per beneficiary per month. CPS had requested National Treasury to pay a fee of R66.70, however treasury had been unable to determine the accuracy of this fee.

The Panel of Experts had also recommended that CPS provide this information for a more accurate calculation including detailing cost incurred by CPS to provide the cash pay point services.

“Recently CPS made a request to the Constitutional Court to determine the fee payable. CPS claims that it has been unable to submit invoices to Sassa and has not received any payment to date. CPS suggests that it has no operational cash to pay grants after May 2018. We request the Panel of Experts to bring this to the attention of the Constitutional Court,” said the Sash.

They also claim grant beneficiaries were not being suitably informed about the Sassa/Sapo card swop, an issue the panel itself has highlighted as urgent. Sash monitors had visited a Sapo branch in 7th Avenue, Retreat, Cape Town on 1 June 2018 and found that beneficiaries there were not provided with any information on the new Sassa/Sapo bank account.

“Instead grant beneficiaries were given the blue Sapo card. Some beneficiaries did not come with the correct information and were redirected to the Sassa office. Sapo officials at the Retreat branch had little product knowledge which made them unhelpful.”

There was no clear signage at the Sapo branch. There were also no bathrooms or queue management.

“Beneficiaries were confused about what to do and were advised to go to the Sassa pay point but this was further away for many of the elderly to walk, and their treatment was undignified in being sent from pillar to post with inadequate prior information available from Sassa or Sapo.”

The Sash informed the panel that the Sassa report to the court “does not allay concerns related to the payment of social grants, in particular the payment of banking fees being passed on to beneficiaries for the Sassa Grindrod Bank account, the continuous delays in the roll out of the Sassa account and the most recent decision to eliminate cash payments as a method of receiving social grants.”

While Sapo had been appointed by Sassa to take over the cash payment function of the grants, these measures worked well in urban areas. Pay points, according to the Sash, appeared to be the only “workable solution to those living in rural areas with no access to the national payment infrastructure.”

“We are concerned that Sapo will not obtain the necessary infrastructure timeously to make cash payments in rural areas.”

Sassa's report was also silent about risks to grant beneficiaries of the elimination of cash pay points.

“Factors such as increased transport cost and banking fees to access grants, grant beneficiaries’ being at high risk of being victims of theft and robberies, convenience and how Sassa will provide a dignified service to grant beneficiaries are not adequately considered.”

The Eastern Cape with 1,431 pay points, KZN with 511 paypoints and Limpopo with 415 pay points were the provinces that would remain reliant on high numbers of pay points based on the 20km formula. Urban areas of Gauteng, the Free State and the Western Cape would have the lowest number of pay points based on access to the national payment system infrastructure within a 5km radius.

“The analysis is not sufficiently detailed on pay points in urban and rural areas for beneficiaries who reside 20 km outside of the national payment system infrastructure.”

It did not appear feasible for 856 Sapo branches to substitute for the current 8,086 pay points. The Sassa report, said the Sash, was not not explicit on how many mobile machines would be procured for outlying areas or whether there would be a permanent arrangement for cash pay points with smaller numbers except to transport them on what appears to be an ongoing basis.

There was a “big difference between the 5km and 20km radius proposals” with the cost to beneficiaries (and their procurators) to access payment channels located beyond a 5km radius being prohibitively high.

“The report is silent on how grant beneficiaries, particularly in rural areas, will receive their grants if pay points are closed.”

“Where do communities of grant beneficiaries go to if they want to petition the closure of a pay point? In terms of administrative justice, the Black Sash submits that Sassa, as an organ of state, has an obligation to follow fair procedures that provides those beneficiaries that may be negatively affected by a decision to close a pay point with adequate notice of Sassa's intention in this regard and as well as allow the affected beneficiary communities a reasonable opportunity to make representation in this regard.”

Government currently fully subsidises cash payments and moving to other payment channels would result in grant beneficiaries having to pay, for example, for withdrawal fees if there is no Sapo facility in the vicinity.

Costs will also accrue to beneficiaries at ATMs and retailers where there is no agreement with Sassa or Sapo and beneficiaries are not aware of this, said the Sash.

With regard to the EPE cards, Sassa and CPS/Net1 had also not provided the Panel of Experts with information on how many of the grant beneficiaries with EPE cards had produced mandate forms, nor what plans are afoot to “prevent and remedy” the illegal migration of grant beneficiaries to the EPE card.

Sassa, in its 30 May 2018 report, advised that amendments would be made to the Service Level Agreement with Sapo, including banking fees.

“To our knowledge, the Service Level agreement has not been signed since the conclusion of the high level agreement between Sassa and Sapo in November 2017. We are yet to receive a copy of the Service Level Agreement from Sassa.”

There were also “significant variances” in the Norms and Standards for Sassa and the South African Post Office in terms of the services to be offered.

“When will Sassa and Sapo adjust the Norms and Standards for post offices? And when will copies of these be made available? “

The shifting time frames of the Sassa/Sapo card roll out was another issue flagged by the Sash.

“Sassa initially reported that the new card would be rolled out from mid March 2018. Then it was changed to April 2018. More recently the time frame moved from 1 May to mid-May. A central question is whether the migration of beneficiaries to the new Sassa/Sapo card will be completed by 30 September 2018 when the CPS contract ends.”

Sassa, said the Sash, seemed to prioritise recipients on the Sassa card who received cash payments but had not provided a detailed plan and time frame for converting all the Sassa Grindrod bank accounts.

“Despite the Constitutional Court order of 23 March 2018 limiting CPS to cash payments, beneficiaries continue to use the SassaA card, administered by Grindrod Bank to receive their grants. This means that beneficiaries now pay the account maintenance fee of R10 together with other bank charges (between R10 and R50) which was subsidised by Sassa until 31 March 20185.”

The Sash had requested Sassa to subsidise these costs.

While the CPS/Sassa contract had been reduced to administer cash pay points only, Net1 continues to make a large profit from social grants disbursements, said the Sash.

“The amount of R9.50 is paid to Net1 from the account maintenance fee, which is considered as profit. In addition to the maintenance fees, grant beneficiaries will also pay other bank fees including ATM withdrawal fees. For example, a beneficiary receiving a R1,600 grant pays R39 per month in bank fees.”

Beneficiaries should be refunded for these bank charges backdated to 1 April 2018 until they migrated to the new Sassa/Sapo account.

“We request the Panel of Experts to direct Sassa and National Treasury to find a solution to stop beneficiaries from being charged these bank fees for using the Sassa Grindrod Bank account or grant beneficiaries will continue to pay the bank fees until they close this bank account.”

Responding to allegations Net1/CPS chief executive Herman Kotze, said the Panel of Experts had not afforded CPS the opportunity to comment or respond to any of the allegations contained in its report and to which the Sash had responded.

He said that “in isolated instances” CPS had not allowed teams “purporting to be Sapo officials” at pay sites “as no prior arrangements were made to allow unidentified individuals in the pay point environment” and that CPS had written to Sassa about the matter.

“CPS has an obligation towards the beneficiaries as well as its own staff that the security is maintained at all times, given the high risk environment that payments are conducted in,” said Kotze.

Kotze said that EasyPay Everywhere “provides its client base with a mobile ATM service, who are also entitled to utilise this service or any other payment channel”.

All cardholders were free to open an account with a bank of their choice or that of the Sapo, said Kotze. DM